BEIJING China's factory activity expanded for the seventh straight month in January, giving Beijing more room to tackle chronic imbalances in the economy, though the rate of growth slowed from December, a private survey showed on Friday.
The Caixin/Markit Manufacturing Purchasing Managers' index (PMI) fell to 51.0 on a seasonally adjusted basis, from 51.9 in December and missing analysts' forecasts of 51.8.
Despite missing estimates, the Caixin PMI showed China's industrial sector continued to perform well in January, with factories enjoying their longest period of expansion since 2011.
China's economy has seen a broad-based pickup in recent months, with fourth-quarter GDP beating expectations due largely to a strong housing market and higher government spending on infrastructure projects.
A recovery in the country's "smokestack" industries has also been supported by government mandates to close down outdated production capacity in the coal and steel sectors, as well as a rebound in investment in the property sector that came amid a record flood of credit.
The momentum continued in January, though there were signs of slowing from December, the Caixin PMI showed.
China's official PMI released on Feb. 1 showed the manufacturing sector expanded for the sixth month in a row in January, though also at a slightly slower pace from December.
The Caixin PMI sub-index for output fell to 51.3, down from 53.7 in December and a four-month low.
New order growth also eased to a four-month low, but new export orders rose at the fastest pace since September 2014, a welcome sign as China has lagged an export recovery which is being seen by some of its North Asian neighbors.
Firms also continued to cut staff levels to control costs, the survey showed.
Inflationary pressures remained sharp, with input and output prices continuing to see healthy gains, though again the speed of increases slowed.
The factory PMI figures were seasonally adjusted, but economists and investors are generally cautious about China data early in the year due to the timing of the long Lunar New Year holidays, when many factories and offices shut.
This year's Lunar New Year fell relatively early, starting at the end of January, and China's statistics bureau cited the holiday as a reason for the decline in the official PMI.
The Caixin survey tends to focus more on small and mid-sized firms.
But even as global demand shows signs of finally picking up, China and other Asian exporters face considerably uncertainty as new U.S. President Donald Trump signals he will take a tougher stance on trade.
Trump has repeatedly targeted China as benefiting from unfair trade practices including government subsidies and keeping its currency undervalued.
Trump and a top economics adviser on Tuesday unleashed a barrage of criticism against China, Germany and Japan, saying the three key U.S. trading partners were engaged in devaluing their currencies to the harm of American companies and consumers.
Despite the pick-up in the fourth quarter last year, China's economy also faces internal challenges as the leadership tries to clamp down on high debt levels and asset bubbles without impacting growth too much.
"The Chinese economy maintained stable growth in January. But the sub-indices showed that the current growth momentum may be hard to sustain," said Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group, in a note with the PMI data."
"We must remain wary of downward pressures on the economy this year."
(Reporting by Elias Glenn; Editing by Kim Coghill)